Job Growth and Lower Mortgage Rates Boosting Single-Family Housing

This year the housing industry has been on an uphill victory. According to NAHB Chief Economist Robert Dietz newsletter, Eye on the Economy, there are two main factors that are helping the single-family housing sector.

Job growth has been on a positive path in 2019. It is reported that there is a historically low unemployment rate at 3.7%. In June 2019 there were 224,000 jobs added to the country’s workforce.

The first six month of the year saw an average of 172,000 new jobs per month.

In the residential construction industry alone the increase was 21,000 jobs in June. The average for the first six month of the year in residential construction stands at 5,800 per month. Since the recession, there have been a total of 923,800 positions added in residential construction.

Also to aid in the booming housing industry is lower mortgage rates. Freddie Mac reports that the averaging 30-year fixed-rate is 3.8%. This is the fifth straight month that mortgage rates have fallen making this one of the best times to finance a home.

A recent industry survey shows that the mortgage loan applications for both purchase and refinance surged in the first week of June 2019.

In the most recent survey put out by the Freddie Mac’s research team it states that this “will help sustain the momentum in the housing market in 2019.”

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Old Lacombe Restaurant to Re-Open as Hotel and Events Venue

La Provence was one of north shore’s dining landmarks until it closed in 2018. What was once a French restaurant, will now open as a hotel and events venue. The spot is perfect for this as it has been compared in the past to a classic French country inn.

Cayman and Danny Sinclair, brothers and local entrepreneurs, purchased the property which they plan to turn into the small hotel and events venue naming it the Inn at La Provence.


“I feel like there’s so much value in that name, it’s so recognized; it means a lot to people. It would be a shame to lose that,” said Cayman Sinclair.

The single-story building currently has several dining rooms and a “lodge-like lounge” with a

fireplace. La Provence, which was built and opened by Chris Kerageorgiou in 1972, became one of the north shore’s most respected restaurants. Well known for Kerageorgiou’s quail gumbo and braised rabbit, his lamb a la Grecque and the little pots of chicken liver pâté set down with the bread, La Provence gave residents a great place to create fond memories.

“My family would stay for hours, sitting around that fire in the front room,” he said. “It was a classic place. We’re really excited to be able to revitalize it.”


The brothers plan will be to reconfigure the existing building for the events venue and build small bungalow-style structures on the two-acre property. The 28 room hotel and events venue would be a perfect place for weddings, corporate meetings and retreats.

“We can host the event, they can stay on the property, and from here they can go to other restaurants for rehearsal dinners or their night out,” he said.

Set to open in Fall of 2019, the Inn at La Provence will also open to the public for brunch on Sundays.


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House-Passed Bill Gives First-Time Home Buyers a Break

We all know that buying a home is a big step for anyone especially for someone who is doing it for the first time. A bipartisan House bill passed at the beginning of July 2019 that will help ease the first time buyer’s anxiety over the home buying process. The bill will allow first-time home buyers to pay less closing cost if they go through homeownership counseling.

“The idea behind the legislation is that counseling should improve loan performance and make people better borrowers,” said Pete Mills, senior vice president of residential policy for the Mortgage Bankers Association, which generally supports the bill.

The Housing Financial Literacy Act applies to mortgages backed by the Federal Housing Administration and is a tool that can be used for first-time home buyers. Those eligible, will go

through counseling which teaches them ways to be financially responsible homeowners. Once completed, they would receive a discount on the upfront mortgage insurance that is required on FHA loans.

First-time home buyers tend to go with FHA loans because of the less-stringent requirements. Although the requirements are more lax than a conventional loan it requires more money for insurance premiums because the FHA loan is riskier. Today the delinquency rate on FHA loans is around 9% where the delinquency rate on a conventional loan is only around 3%.

The risk for the lenders on an FHA tends to be higher because a good many of the first-time home buyers using an FHA have low or moderate incomes with lower credit scores. Lenders require those using the FHA to pay mortgage insurance along with an upfront mortgage insurance premium. Currently the upfront amount paid is 1.75% of the base loan amount. If a borrower does not have the money upfront to pay the premium, the cost can be rolled into the loan. The Housing Financial Literacy Act allows a discount of 25 basis points making the premium amount 1.5% of the base loan amount instead of the 1.75%. As an example, the upfront mortgage premium on a $200,000 loan would be $3,500 but with the discount the first-time buyer would only need to pay $3,000.


Hopefully if put into law, the bill will not only help reduce cost, but also give first-time home buyers the tools to become financially responsible homeowners.

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Too Little or Too Much….

When purchasing a home, the majority of homebuyers will purchase using a mortgage. Your credit and your down payment will affect your monthly payment and mortgage rate. The more you put down the lower your monthly payment will be making it easier to build more equity in a shorter amount of time. Although this is a plus, it can back-fire when a homeowner puts down most of their savings on a down payment leaving no funds for home maintenance or emergencies.

“There’s really no one-size-fits-all solution,” says Jason Speciner, a certified financial planner in Fort Collins, Colorado.

Find a happy balance. Figure out how much you can put down to lower payments without leaving the finances high and dry for those upgrades, maintenance issues, life emergencies or life in general. Here are a few pointers to follow when deciding the amount to put down on a home.

Do the benefits outweigh the negatives? Future homeowners are surprised at the differences in the monthly mortgage payments when calculating different down payment amounts. If a higher down

payment would mean a borrower could avoid mortgage insurance this would definitely be a plus. Mortgage insurance is a monthly expense added on top of the monthly mortgage payment making it a much slower process of building equity. There are times when a higher down payment does not reap any benefits. If it leaves a future homeowner strapped for cash it is just not worth it. If someone just needs to put down 3% for a conventional loan but tries to scrape together 5% to lower the monthly payment it just doesn’t make enough difference and cannot be justified if it leaves a future homeowner strapped.

Always be mindful of the effects a higher down payment will have on your financial plan. According to the Bank of the West’s 2018 Millennial Study, 29% of homeowners between the ages of 21 to 34 borrowed from their retirement accounts to make a large down payment on a home. Taking from Peter to pay Paul is not always the greatest solution. Taking money from your 401(k) is definitely risky. If you loose your job, the money must be put back into the 401(k) before the next yearly tax filing or it will be treated as ordinary income with a 10% penalty. An Roth IRA is not as risky, but when taking out money from your IRA you are losing tax-free growth.

Always expect the unexpected. You always want a cushion to fall back on. Leave some cash in the bank for emergencies. Sadly NerdWallet’s 2019 Home Buyer Report, says that 34% of recent first-time home buyers feel they are no longer financially secure after purchasing their home. Homownership includes many expenses that first time homebuyers might not have planned for. Do not drain your savings on a down payment and closing costs.

Speciner says it best, “Emergency reserves are for ‘Oh, shoot’ moments.”


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